Main stock price index seen retesting 8,000 level
The local stock barometer is seen continuing to consolidate this week while trying to gather steam to retest the 8,000 level.
Today, the stock market is on holiday break in observance of Eid’l Fitr or Feast of Ramadan.
Last week, the main-share Philippine Stock Exchange index (PSEi) fell by 68.06 points or 0.86 percent to close on Friday at 7,814.17.
Joseph Roxas, president of stockbrokerage Eagle Equities Inc., said the PSEi would likely continue consolidating this week.
Jonathan Ravelas, chief strategist at BDO Unibank, said investors remained on the sidelines as market players awaited fresh leads on the economy.
“Chartwise, the week’s close at 7,814.17 is viewed as a mere correction,” Ravelas said.
“Look for a sustained break above the 8,000 levels to trigger tests toward the 8,150-8,200 levels. Otherwise, the market is susceptible to profit-taking near the 8,000 levels,” he said.
Ravelas said he expected the PSEi to continue trading within a range of 7,700 to 8,000.
The PSEi has so far gained 973.53 points or 14.2 percent from the end-2016 closing of 6,840.64.
Investors are awaiting developments on the Duterte administration’s tax reform program. The first phase of the package, which simplifies and lowers personal income tax rates while broadening the value-added tax coverage, rationalizing estate and donor’s tax and adjusting oil and automobile excise taxes, is up for Senate deliberations following the approval of the House version.
The market is expecting the tax reform package to be legislated within this year.
Meanwhile, the peso also weakened last week by 0.64 percent after the US Federal Reserve raised its key rate by 25 basis points and hinted of another hike within the year.
“Expect the market to try the 50.40:$1 levels anew after it failed to break below the 49.40 support level. A break above 50.40 will put the 51-51.50 levels within striking distance,” Ravelas said.
Trading range for the peso this week is seen within the 50.15-50.35 range against the dollar.
Globally, Citigroup said that these would be the key events that investors would watch this week. The US will focus on Federal Open Market Committee speakers including Chair Janet Yellen, softening inflation, the US Congressional Budget Office’s update of the 10-year budget projections and its scoring of the American Healthcare Act draft bill and the US reports on trade deficits and the impact of steel imports on national security. In Europe, European Central Bank (ECB) president Mario Draghi will get the spotlight during the Central Banking forum in Sintra as he could lay out his thoughts about the ECB’s exit strategy. Citi expects additional moderation in the German and Eurozone inflation.
